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Bitcoin price hints at ‘megaphone’ bottom pattern, and a breakout toward $40K

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Bitcoin’s (BTC) latest rebound from below $30,000 has increased its prospects of extending its retracement move higher, at least according to one classic technical pattern.

Dubbed as Broadening Formation, the megaphone-shaped pattern appears when the price moves inside two diverging trendlines. Investopedia states that a broadening formation represents disagreement over the next potential bias among investors. As a result, the price forms higher interim peaks and lower interim lows.

Bitcoin appears to be trading inside a similar structure, as shown in the chart below. Nonetheless, the cryptocurrency lacks volatility, one of the key features of the broadening formation pattern.

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Stabilized Bollinger bands reflect limited price volatility in the Bitcoin market. Source: TradingView.com

Should the pattern play out, the Bitcoin price will undergo a bullish breakout above the structure’s upper trendline.

In doing so, it would expect to rise by as much as the maximum height between the broadening formation’s upper and lower trendline. The upside setup appears because traders interpret broadening formation as a trend reversal pattern.

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But until then, the pattern offers swing trading opportunities to daytraders, i.e., a bounce from the lower trendline tends to present Long opportunities toward the upper trendline, and a pullback from the upper trendline could have traders open short positions toward the lower one.

Again, the Bitcoin price volatility is lower enough to invalidate such intra-range setups.

Falling channel

The most interim resistance level is near the dashed trendline in the Bitcoin chart below.

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Bitcoin falling channel setup limits bullish broadening formation’s upside outlook. Source: TradingView.com

A close above the dashed trendline expects to have Bitcoin test $35,00 as its next resistance target. On an extended move higher, the potential to hit $40,000 is higher based on the cryptocurrency’s recent price patterns.

Conversely, a pullback from the dashed trendline tends to validate a Falling Channel pattern. On the other hand, Bitcoin could retrace its steps lower towards the so-called Broadening Wedge’s support trendline (next downside target near $28,500).

Bitcoin price fundamentals

The conflicting Bitcoin setups emerge as bulls continue to defend $30,000 as support while bears enjoy control over the $34,000-$35,000 area. Unfortunately, that has landed BTC price inside a constrained trading range, giving no interim clues about where it wants to head next.

Fundamentals have played a key role in trapping Bitcoin prices. To the upside, inflationary pressures from the traditional finance sector have provided tailwinds to Bitcoin’s safe-haven narrative. Meanwhile, the downside is an increasingly global regulatory discontent toward the cryptocurrency sector.

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In the last two months, the market has witnessed China banning cryptocurrency trading, India raiding regional crypto exchange WazirX, and the U.K. banning Binance’s subsidiary from operating regulated businesses. In addition, Japan and Hong Kong also issued warnings and restrictions against Binance.

Earlier this week, the U.S. state authorities closed crypto company BlockFi’s accounts, alleging that the startup sold unregistered securities. The sector also received criticism for increasing carbon footprints via mining, which requires heavy computational power to run blockchains.

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“As long as global regulation of cryptocurrencies is not eased, or a resolution is met, I believe it is difficult to gain public trust, and for Bitcoin to scale the heights it reached in early 2021,” Adam Todd, Founder, and CEO of Digitex, told Cointelegraph.

JG Collins, head of the Stuyvesant Square Consultancy, also wrote in his Seeking Alpha op-ed that “national economics regulators, state environmental regulators, and municipalities troubled by “mining” raising local electrical rates will sweep cryptos away like a tsunami.”

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Mt. Gox Bitcoin Payouts On Horizon After Creditors Approve Plan

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The light finally appears to be at the end of the tunnel for the Mt. Gox creditors, who have approved a plan that will let them choose to receive some of the coins they have been waiting years for.

In a translated letter, Nobuaki Kobayashi, the Japanese lawyer and trustee for the now-defunct bitcoin (BTC) exchange, explained that “approximately 99%” of the creditors had voted in favor of an offer that has since been put before a branch of the Tokyo District Court.

A voting process that began back in May this year wrapped up earlier this month.

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The court has since confirmed the order, although there was no mention of an exact timescale for the token refunds.

The trustee wrote that an announcement “will be made to rehabilitation creditors on the details of the specific timing, procedures and amount of such repayments.”

However, Kobayashi wrote that the process would “finalize” and become “binding” in “approximately one month from” October 20.

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The creditors will then be able to file their claims through a website, by filing a proof of rehabilitation claim.

Kobayashi wrote that the trustee “would like to express sincere gratitude to all involved parties for their understanding and support.”

The BTC exchange was once the world’s biggest, but spectacularly folded in 2014 following a spate of hacking attacks that saw raiders make off with thousands of BTC tokens.

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Creditors have been trying to recover their funds ever since, but have been locked in a protracted legal struggle that has rumbled on over the years.

The Fortress Investment Group has previously offered creditors some 80% of claims. But the trustee promised a higher figure, closer to about 90%. The tokens lost in the hacks will likely have to be written off, however, meaning that payouts are going to be a fraction of the original amounts held.

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JPMorgan: Inflation Hedge Narrative Propelled Bitcoin’s Price to ATH

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According to some JPMorgan analysts, bitcoin hit an ATH because people started investing in it as a better hedge against inflation than gold.

Strategists at the financial institution JPMorgan Chase & Co. argued that the reason behind BTC’s all-time high price is not the launch of the ProShares Bitcoin Strategy ETF. Instead, concerns about the rising inflation made the digital asset an attractive investment option, and that led to its recent rally.

Gold Failed, BTC Prevailed

The moment, which many people in the cryptocurrency community have been waiting for, finally arrived on October 19th when the ProShares Bitcoin Strategy futures-backed ETF, named BITO, started trading on the New York Stock Exchange. It became the first such product approved in the United States.

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During the first day of its launch, it generated massive trading volumes and even became the second-highest traded fund ever. Shortly after, BTC’s USD value headed straight north towards a new all-time high at roughly $67,000.

Still, according to JPMorgan strategists, including the managing director Nikolaos Panigirtzoglou, another factor drove bitcoin to that milestone. The specialists indicated that the cryptocurrency had replaced gold as a hedge against inflation in recent months, which had propelled the price north:

“By itself, the launch of BITO is unlikely to trigger a new phase of significantly more fresh capital entering bitcoin. Instead, we believe the perception of bitcoin as a better inflation hedge than gold is the main reason for the current upswing, triggering a shift away from gold ETFs into Bitcoin funds since September.”

JPMorgan’s team noted that the last couple of weeks were not that successful for the precious metal. Taking a look at a broader period, bitcoin ETF’s have significantly outpaced gold ones, as the strategists revealed:

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“This flow shift remains intact supporting a bullish outlook for Bitcoin into year-end.”

Bitcoin Funds vs. Gold ETFs: Source: JPMorgan
Bitcoin Funds vs. Gold ETFs Inflows: Source: JPMorgan

Can BTC Now Change The Stance of The Big Boss?

Jamie Dimon – Chief Executive Officer of JPMorgan – is among the most prominent critics of the leading digital asset. Still, it seems like he has started releasing the tight grip on it.

It all started in 2017 when the top executive called bitcoin a “fraud.” Dimon did not stop there and warned that “it’s worse than tulip bulbs. It won’t end well. Someone is going to get killed.” Shortly after, though, he regretted making that comment, and his financial institution became much more accepting of BTC.

Last year, Dimon weighed in on the matter once again. This time he was softer in his comments saying that bitcoin is not his “cup of tea” and that he has no personal interest in it.

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A few days ago, the CEO returned to his negative phase, describing BTC as “worthless.” Nevertheless, he acknowledged that most of JPMorgan’s clients do not share his opinion and show an increasing demand for digital asset services.

With BTC charting a new all-time high, the crypto community is yet to find out whether Dimon will maintain his hostile viewpoint on the matter or rather soften a bit and allow more offerings to his bitcoin-hungry customers.

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Another One: Valkyrie Bitcoin Strategy ETF to Commence Trading on Friday

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Another futures-backed Bitcoin exchange-traded fund (ETF) is set to begin trading on Friday.

The Valkyrie Bitcoin Strategy ETF is slated to commence trading on the Nasdaq stock market on Friday, Oct 22, just four days after the first-ever BTC futures fund was launched.

Bloomberg senior ETF analyst Eric Balchunas has confirmed that the Valkyrie fund will be launching on Friday after initially stating it would be trading today.

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He added that the firm has also changed its ticker from BTFD to BTF, commenting that the Securities and Exchange Commission “probably wasn’t a fan” of the former. BTFD is an acronym for “buy the f*cking dip” in crypto circles.

Later on, a company representative confirmed to Bloomberg that the ETF is indeed scheduled to launch on Friday.

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VanEck Bitcoin Fund on Monday

Just like ProShares, the Valkyrie product will not be investing directly in Bitcoin but will seek to purchase a number of BTC futures contracts. It will attempt to ensure that the total value of BTC underlying the futures contracts held by the fund is as close to 100% of the net assets as possible.

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